Apartment hunting is stressful. You have to consider things like location, monthly rent, features and amenities. The search for the right apartment becomes even more stressful if you have less-than-stellar or even bad credit scores.
Sometimes, having a poor credit score is a deal-breaker during the apartment search. Prospective landlords are looking for trustworthy renters with a good credit score and stellar rental history who can pay the monthly rent on time. You might be a trustworthy applicant who can make the rent payment on time, but the property manager doesn’t know that yet. In that case, you’ll have to do more than the average applicant.
You might wonder how to get an apartment with bad credit and the key is to position yourself as a strong candidate by taking certain steps to make you positively stand out to potential new landlords and property managers.
What is a credit report?
Your credit report is a rating, ranging from 300 and 850, based on the strength of your credit history. Having a good credit history is important for many financial reasons and when it comes to renting an apartment, landlords can use your credit score as a quick way to quantify how “risky” of an investment you are.
A high credit score indicates low risk and good payment history, while lower credit scores mean you might have to pay higher interest rates to offset the additional risks.
According to the three major credit bureaus, these five main factors make up your credit records:
- Payment history (35%): Your history of paying bills on time and if you’ve ever paid late or filed for bankruptcy
- Amounts owed (30%): How much you owe in loans and outstanding balances
- The average age of credit (15%): How long you’ve had your credit accounts for
- New credit (10%): Recent credit card activity, such as hard inquiries
- Credit mix (10%): Your makeup of revolving and installment accounts
What credit score do you need to rent an apartment?
The first thing you need to do if you think you have bad credit is to do a credit check. Potential landlords prefer renters with financial security in the good to excellent range, which is 700 and above. Nonetheless, this score can differ depending on who your landlord is, so it’s a good idea to find out the minimum score you need to qualify.
Ways to make you positively stand out during the apartment hunt
Renting with fair credit or even no credit is more difficult, but not out of the question. While you’re in the apartment hunt phase, consider adopting these perspectives and trying these tactics to get an apartment with low credit scores.
1. Alter your expectations
You may strive for a luxury apartment complex with fancy amenities, but your dream apartment may differ from the apartment you can actually get. Consider small apartment complexes or owner-occupied units. Sometimes, there’s more flexibility in these situations. With a more personal relationship, you may find someone who is willing to give you the benefit of the doubt and help you along. Oftentimes, property management corporations own larger complexes and have fixed and/or inflexible credit policies, which make it difficult for leasing agents to bend the rules, even if they really like you and think you can pay the rent.
Another idea is to consider cities and neighborhoods that have an excess supply of apartments for rent. Landlords in these areas are struggling to find tenants and is more willing to overlook certain credit issues if they feel they have a good rapport with you and can trust you.
Take this time to rebuild your credit and store some extra cash in your savings by finding a less expensive apartment.
2. Look for rentals that don’t check your credit score
To avoid this problem altogether, you could try to find an apartment with no credit checks. You’ll have the best luck dealing with individual landlords or private landlords rather than a rental company, as an individual landlord might walk back their own rental requirements if you’re able to provide proof of financial stability.
3. Think from the property owner’s perspective
One of the main reasons why landlords require a credit record is because they don’t know you yet. Your credit history gives them some insight as to how you handle your money, so it’s a good idea to think from the perspective of the future landlord and consider what would make you a good tenant and less of a risk than it would seem from your credit.
4. Be honest
Keep in mind, that having poor credit does not mean you’re a poor tenant. With student debt reaching astronomical levels, there are many victims of less-than-perfect credit who are still responsible and trustworthy. Be honest with your landlord about the state of your credit score. If you had a momentary lapse of judgment in your finances, explain how you’ve matured and increased your financial literacy.
5. Write a cover letter
An additional document to bring to help prove yourself to potential landlords is a cover letter that explains your situation. It’s important to be straightforward and honest about your bad credit from the beginning since they’re going to find out anyway. In your cover letter, explain why your credit score is low and how you’re actively trying to improve it.
If you show your potential landlord that you’re improving your credit and that you have enough money to make payments despite your bad credit history, they’re more likely to accommodate. You could also have your previous landlord write a statement about you as a renter. Previous landlords’ input can go a long way in helping your cover letter stand out.
6. Showcase your personality
You and your potential landlord are strangers, so he or she will need to get to know you before deciding whether or not to rent you the unit. Help the building owner or manager get to know the real you that you can’t showcase on paper. Don’t be afraid to talk about yourself and any roommates you may have. Also, make him or her laugh — it can’t hurt!
How to make a low credit score look better during the application process
Once you’ve found some apartments you like and are ready to fill out an application, consider these strategies to help improve your odds of being accepted.
7. Get a co-signer
Getting a co-signer allows you to use someone else’s credit to apply for an apartment. An apartment co-signer is a party on the lease who agrees to cover rent costs if the tenant is unable to for any reason. This option is great for those who have bad or no credit at all. However, this option could become a problem if you fall behind on payments because it’s now the co-signer’s duty to pay the rent.
8. Sign a lease with someone else
Even if you have bad credit, adding a roommate to the lease or signing on to someone else’s lease will help give you more credibility. If you opt for this strategy, your potential roommate must have a better overall credit score or a better rental history than you.
9. Get a good referral
Your prospective landlord may want to hear from people other than you when determining whether to rent you the apartment. In that case, provide him or her with the names and numbers of people who can vouch for you. Additionally, if you had a positive relationship with a former landlord, ask him or her to write you reference letters. Reference letters can go a long way toward helping you nab the apartment.
Prospective tenants with outstanding debts may get a pass if they provide proof of job security and a stable income. Landlords simply want their tenants to pay their rent timely and consistently, and a steady stream of income from a full-time job is proof of your capability to pay rent on time. Not all employers’ policies allow for providing such letters but if you can get an employment verification letter, it should include your hire date, annual salary and history of promotions. This can help with your rental application.
10. Offer to pay more rent payments or a higher security deposit upfront
To make a great first impression, offer to start paying rent upfront. You could potentially pay a few monthly payments or go beyond the first month’s rent. You could also offer to invest a larger security deposit. This strategy shows landlords that you have the money needed to pay the rent and could potentially serve as a buffer if you end up having financial challenges in the future.
11. Request setting up automatic payments
Requesting to set up automatic payments demonstrates that you make consistent payments. This is another way to prove you have a steady income and won’t have any missed payments. If you decide to set up automatic payments, make sure you have enough money in your account each month to avoid overdrafts.
12. Bring proof of responsible rental history
If you’ve never missed or made a late rental payment, you’ll want to provide that to your potential new landlord. Your utility payments and rental history are valuable indicators that you’re a responsible tenant. A positive payment history could potentially counteract a bad credit history.
13. Provide pay stubs and bank statements
If you have a low credit score, you may need to prove to the building owner that you can pay for the apartment. Print out at least three months of your pay stubs along with the documents of any roommates you plan to have. Ideally, the rent shouldn’t take up more than one-third of your monthly income, so keep in mind that landlords are watching out for that ratio.
14. Sign a short-term lease
If a landlord is hesitant to sign a 12-month lease, ask if it is possible to negotiate a short-term lease until they’re confident in your ability to pay on time. While a short-term lease can function as a trial period of sorts for both you and the landlord, it can, however, mean paying more on a monthly basis or having your rent increased after just a few short months.
Alternatively, if you have poor credit but are able to prove financial stability, you could stand out among applicants by offering to sign a longer-term lease. Longer leases are attractive to landlords because it means saving money on advertising, staging and cleaning the unit whenever a tenant moves out, and it negates the risk of costly prolonged vacancies in between renters.
Ways to boost your credit history
If you have a poor financial history, you’ll want to actively work on ways to improve it. Here are some ways to boost that score so you’re in a more optimal range moving forward.
Pay your bills on time
Consistently paying your bills on time can help improve your payment history, the biggest factor in determining your credit score. Make sure to stay caught up on credit card debt and medical bills.
Pay more than the minimum amount
To improve your credit utilization ratio, aim to pay off the highest amount you can (or the entire amount if possible), which can help improve your credit report.
Don’t close old cards
Older credit cards can improve your average age of credit, an important factor in your financial history. This is another way to improve your credit reports long-term.
Sign up for a secured credit card
Secured credit cards can help you establish or improve a low credit score for renting an apartment. Secured credit cards report to all three credit bureaus and include your history in your report.
Don’t shop around
Companies run credit checks each time you apply for a new line of credit. A credit check can actually ding your overall credit report and hurt you. Do your online research but don’t apply for several cards without thinking about the long-term impact.
Ask your landlord to report on-time payments
Ask past landlords if they can report your on-time rental payments to the bureaus. This can help build a positive financial relationship and help you get an apartment with bad credit.
Build a savings account
Having a savings account is a way to boost your credit and improve your financial security. Conventional wisdom says to pay yourself first. Make payments to your savings account each month when you’re rebuilding your bank account.
Can you be denied an apartment because of bad credit?
It’s possible to get denied for an apartment due to your bad credit score. This is most likely to happen if you have a score under 620 along with bad rental history — like late or missing payments. However, landlords check your credit score in the first place to determine if you can pay your bills on time. It’s a starting point to see how much of a risk you are, but if you can prove yourself otherwise you have a good chance of securing an apartment.
You can get an apartment with bad credit score
You can get an apartment with bad credit. Just be straightforward and strategic in the application process.
There’s no such thing as one home fits all, so if you’re looking for something in particular for your next rental, we’ve got you covered. Once you determine how much rent you can pay and know how to get an apartment with bad credit, it’s time to start compiling the documents and continue the search for your new apartment.